September 1, 2012

Krugman: Monetary Versus Fiscal Policy, Revisited

“Sometimes, they say, I declare that monetary policy is ineffective once you’re at the zero lower bound; other times I berate Ben Bernanke for not doing more. Which is it?”

He goes on to clearly identify his take on the economy and what policymakers should do about it.

I know there will be carping about the "government just goes out and creates jobs" part. Many claim that government doesn't create jobs, which is, of course, bullshit. I've held a government job or two for twenty-six years, first as an air traffic controller and then as a software engineer.

In the grander scheme, too, government possesses the ability to be the employer of last resort. Heard of the WPA? That agency employed Americans during the Great Depression, building out our infrastructure and bridging the gap until the greatest peacetime expansion in US history began, on deficit-spent money.